PV module inventories continue to soar

Photovoltaic module inventories have "soared" due to weak quarter one demand, says Solarbuzz’s new quarterly report. They are now expected to hit a "record" 8.6 gigawatts. The second half of the year will be "challenging".

Photovoltaic module inventories are expected to hit a record 8.6 GW. Image: Frankensolar.

The research analysts say that while photovoltaic manufacturers believed module shipments would increase 12 percent from the first to the second quarter of 2011, they actually declined by 22 percent.

And, despite the fact demand was said to have risen by 79 percent and production fell by around 20 percent quarter on quarter, Solarbuzz says both cell and module inventories increased by 559 megawatts.

Consequently, inventories are expected to hit 8.6 gigawatts (GW) by the end of the second quarter. In particular, upstream inventories are expected to show a "sharp" increase, while downstream will see a "small" decrease.

This market pressure is expected to make the second half of the year challenging, says Solarbuzz, with expectations that the end market will grow just five percent from 2010.

In a statement, the company explains: "The revised global PV market size of 19.3 GW for 2010 is now projected to increase to just 20.3 GW in 2011." IMS Research, on the other hand, believes that over 23 GW will be reached this year.

Driving demand

It is believed that lower module prices will now drive demand upwards in the second half of the year.

"However, chances for that depend on downstream inventories falling fast and on resolving the policy uncertainties in Europe that have characterized 1H’11. Rather than further procurement, most downstream companies are currently focused on reducing inventories in order to avoid write-offs emanating from the collapse in prices," continues the statement.

"Module prices have fallen incredibly quickly in the first half of 2011," commented photovoltaic market analyst Sam Wilkinson. He added: "Considerable reductions in price combined with no mid-year feed-in tariff reduction in Germany, will make investment in photovoltaics attractive again."